India’s Coal Sector Need Rs. 3,29,651 Cr Investment For Green Makeover: iForest

Indian Coal Plants Need Rs. 3,29,651 Cr Investment For Green Makeover: iForest

Internationally, countries like the United Kingdom (UK) have recently shut down their last coal power plant. India, despite being the third largest emitter globally, simply cannot follow suit, even as it has established its first committee to develop a just transition framework. This framework aims to prepare guidelines for the government to transition away from fossil fuels. As a fulcrum of climate action, Just Transition has been a guiding principle for both the Global South and North. To estimate the cost of this transition, iForest, in its recent report on Just Transition Finance, studied models from Germany, Poland, South Africa, and Spain to evaluate the financial investment required to undertake such a transition.

iForest in its research suggested the use of spectrum of investments, including grants and subsidies, necessary to decommission and repurpose coal mines and power plants. The study recommended the need for more than a trillion dollars over the next three decades to transition its coal mining and thermal power sectors.

The study’s assessment of the costs of transitioning from coal by 2050 includes all existing coal mines and coal-based Thermal Power Plants (TPPs), excluding captive TPPs. The geographic distribution of these coal mines and TPPs is as follows:

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• Twenty-eight districts have both coal mines and TPPs.
• Twenty-three districts have only coal mines.
• Eighty-six districts have only TPPs.

Explaining the concept of Just Transition, the study clarified that Just transition is not simply about transitioning from fossil fuels to non-fossil-based investments; it has wider ramifications. As highlighted in the report, it facilitates a smooth shift from coal to renewable energy (RE), ensuring minimal disruption to existing infrastructures and jobs, while maintaining energy access and security and supporting green jobs and growth in coal-dependent regions. Undertaking this transition will require investment in renewable energy sources like solar, wind, and Battery Energy Storage Systems (BESS). The report necessitates the addition of the green repowering of Thermal Power Plants for energy transition, which as per estimates would involve phasing out 237.2 Gigawatts (GW) of coal-based power capacity and replacing it with solar energy and BESS.

Top Coal Producing States With Potential To Undertake Green Energy Transition

In the study, iForest selected four districts from the top coal-producing states: Ramgarh and Bokaro in Jharkhand, Korba in Chhattisgarh (the second-largest coal-producing district), and Angul in Odisha (the third-largest coal-producing district). However, the decommissioning and green repowering of Thermal Power Plants in these states are expected to incur an estimated cost of ₹3,29,651 crore ($41.2 billion). Of this, nearly 40% will need to be in the form of grants and subsidies. Grants will be required for decommissioning and compensation, while subsidies will be needed for green repowering of the sites. To support the green energy transition, the states will need to extend estimated energy substitution and price support of ₹1,78,575 crore. Additionally, the report foresees green energy investments (excluding the green repowering of TPPs) reaching ₹40,29,275 crore to complete the transition. Whereas, to make green energy investment in repowering of thermal power plant (TPP) the green energy investment reaches $531 billion, accounting for 51.5% of the total transition costs.

Estimated Green energy investments

Saur Insights

Recently, Indian think tank NITI-Aayog has also formed to committee to create a just transition framework for the country to encourage shift from coal-based jobs to renewable energy. Currently, the total thermal capacity, based on coal and lignite, stands at 217 GW. Additionally, 28.4 GW capacity is under construction, of which 14 GW is likely to be commissioned by FY 2025. Further, 58.4 GW is at various stages of planning, statutory clearances, and bidding. In the last 100 days, the Ministry has awarded 12.8 GW of new coal-based thermal capacity. However, balancing out these additions might be over 20 GW of retirals of older plants by 2030, especially if renewable capacity additions accelerate enough to support incremental demand as well as core demand.

Trillion Dollars Needed For Green Repowering Of Thermal Plants: iFOREST Report

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